Bill Gates: Canadian Chamber of Commerce CAN>WIN Conference 2007

NANCY HUGHES ANTHONY (President and CEO, Canadian Chamber of Commerce): Ladies and gentlemen, Mesdames, Monsieurs, if I could have your attention. I hope you are enjoying your lunch. I would ask you to continue to enjoy your lunch, quietly if you can. My name is Nancy Hughes Anthony. I’m the President and CEO of the Canadian Chamber of Commerce, and I’m truly honored today to introduce our very special guest speaker.

I must say we’re very fortunate today because Mr. Gates has indicated that he wants to take this opportunity to not only speak to us but also engage in a dialogue with us, so he has accepted to answer questions that you may have of him following his remarks. Nous sommes très privilégiés d’avoir M. Gates avec nous aujourd’hui et nous le remercions d’avoir accepté notre invitation. I’ll just give you a few very brief remarks about Mr. Gates’ background.

Bill Gates has not only been a visionary, building Microsoft into one of the greatest business success stories of modern times, but he is also an exemplary leader, transcending the very broad parameters of world business through his foundation. A couple of facts: under Bill Gates’ leadership, the Microsoft Corporation posted record revenues in excess of $44 billion U.S. for the fiscal year ending June 2006; the company employs more than 61,000 people in 102 countries and regions.

Now, big changes in Mr. Gates’ life. Effective July 2008, he will transition out of the day-to-day role in the company to spend more time on his global health and education work at the Bill & Melinda Gates Foundation. Also, after July 2008, Mr. Gates will continue to serve Microsoft’s Chairmen as an advisor on key development projects.

Bill Gates grew up in Seattle. He entered Harvard University in 1973, where he developed a version of the programming language BASIC for the first microcomputer. In his junior year, Mr. Gates left Harvard to devote his energies to Microsoft, a company he had begun in 1975 with his childhood friend Paul Allen, and from there, of course, Bill Gates went on to create history.

Philanthropy is very important to him. Mr. Gates and his wife, Melinda, have endowed a foundation with more than $28 billion to support philanthropic initiatives in the areas of global health and learning with the hope that in the 21st century, advances in these critical areas will be available for all people. We are truly indebted to him for his business leadership, his pursuit of his vision, and the global legacy that he continues to build and deliver. So ladies and gentlemen, please join me in welcoming Mr. Bill Gates.

BILL GATES: Good afternoon. I’m excited to be here. It was five years ago when I last keynoted the CAN>WIN event. It’s amazing how much has changed in those five years. We’ve had this as an annual event. Steve Ballmer has come up a lot of times, and the dialogue truly been fantastic to talk about how, with all the great changes in the world economy and the advances in technology, a country can seize those opportunities and make sure that they work to your advantage.

Today, technology is advancing faster than ever. Books like Thomas Friedman’s “The World is Flat” really pronounce that it’s a fundamental change, that things are never going to be the same, and in so many ways, it’s an improved world. That is, by bringing a high percentage of the world population into the market economy, we not only get bigger markets, but we get more innovation. We get engineers all over the world coming up with great new ideas. We get people innovating on how products get built.

The scale of these activities is incredibly beneficial. Certainly, in industries like the software industry or the drug industry, the larger the market, the more risk can be taken in terms of doing new work. And when we combine that with breakthroughs in computer technology and advances in biology, we can see that it’s a fantastic picture, that we will be changing the way that people learn, the way people buy, the way they entertain themselves, and the way they work quite dramatically.

You know, five years ago, when people thought of music, they still probably thought quite a bit about CDs. They probably thought about cameras with film. Today, obviously, those have become digital endeavors, the way you edit and share, hopefully legitimately, all of your songs and photos, that’s done on the Internet.

We can already see that many other things are changing as well. The idea of TV: now, you’ll be able to find the shows of interest, your kids’ sports game, or the lecture on the obscure topic that you have an interest with. Because it will be delivered over the Internet, it will be very different. The way we think about phone calls, the way we think about finding the products that we want to work with, it’s all done on a digital basis.

Even industries that you would traditionally not associate with computer technology, like the car industry. It’s doing its design on a digital basis and sharing around the world what their parts requirements are, doing models that can look at what the safety capability is going to be, letting customers even order custom things that can—the information goes all the way down to the factory level. So it’s a very digital activity.

One of the largest investments of my foundation is actually in Canadian National Railway, and Sean Finn and I were talking about how even that business, digital signaling, digital planning has come in and made a huge difference in terms of how they organize their activities, and so this digitization of your workplace and your lifestyle activities is proceeding at full speed.

Perhaps this is most pronounced when we look at the young people who are open-minded. This is a generation who grew up on video games and just takes for granted that the world’s information is out there on the Internet. In fact, for traditional disseminators of news in the newspaper form, they are seeing a decline in readership, and yet the ability to get information and contribute information in this new world is actually somewhat better.

Now, all these changes are, in a sense, a challenge to governments. Every government has to wake up and think about this flat world and say, “How do we make sure that as these improvements are taking place, that our citizenry is ready for this? What are some of the downsides that we can offset? What are some of the ways that we can tune our investments?”

And it’s not just government. I think a key theme of bringing together everybody we have here is that the responsibility to think about what would have been traditionally government issues, that business has a very substantial role to play here. When we think about education, the business community needs to get involved in education. They need to think about how their skill sets or their needs for certain types of workers, how those can be expressed and how they can partner out and get involved in those activities.

Economies like the Canadian economy and the U.S. economy in a certain sense are very high-cost economies, and it’s easy to look at China or India and say, “Well, isn’t this a challenge in that they have workers whose salary levels are much lower?”

In fact, it’s an opportunity because the number of products, the amount of work, the quality of work can be increased. That’s not a fixed thing, and certainly we saw as we moved from the agricultural economy into the industrial economy, from a manufacturing, industrial economy into a service-based economy, that the opportunities worldwide were incredible and that we should all feel good that livelihoods not only in the rich countries but around the world are going to be increased.

But these countries, the U.S. and Canada, and others, have to say, “What is our edge? What is the unique thing, and how do we renew the strengths that got us here in the first place?” And that often brings us back to the issue of investing in education. The jobs, more and more, will be college-educated jobs. The categories that are high school only are, to some degree, being eliminated by automation, and that’s much more of a trend than having those jobs move overseas. Sometimes people don’t see that. If you think about manufacturing, if you think about repair, the quality of the products, the design of the products, is simply changing what, say, for an automobile or consumer electronics would have been necessary; now, that’s not a necessary thing. When we think about equal opportunities in our country, we think about the negative effects of not having great opportunities for people, we really come back to education and what has to be done there.

Of course, there are differences between the U.S. and Canada. I think those are very positive things, opportunities to learn. Canada, it certainly has some advantages. In terms of the cost of its medical system, although high, are not as high. Perhaps the legal system, defense costs. When it comes to private universities, the United States is very lucky that the amount of donations and involvement there and the strength of that system is, really, the envy of the world.

If you looked at the top universities around the world, North America, including a lot of great Canadian institutions like the University of Waterloo. That’s, actually, for many years, the place that Microsoft is hiring as many people as anywhere else in the world. In that top 100, probably today something like 75 of them would be from North America.

Now, it’s fair to say that there would be very few Asian institutions in that list today, but it’s probably a great thing for the world that over the next 10 years, we can already see, given the investments that are being made, that will change, and it will be more balanced in terms of where the population is. A strong example of that is that Beijing University of Xinghua University, the leading two universities in China, I think will break into the top 20 or perhaps one of them even into the top 10 sometimes in the next decade. That’s an interesting challenge. It’s a competitive challenge.

Technology is also changing how we think about education. A motivated student can go out and find information on any topic. Leading universities are putting their lectures online, and so those are accessible and no longer the unique element. There is certainly a need to experiment in education.

Microsoft, around the world has done now a dozen schools that are designed around technology to see, when you bring in the idea of getting rid of the textbooks and having a Tablet-type device that kids can carry around and not only get their text materials, but also get everything on the Internet, and not only use a keyboard, but also take their notes in ink or record the lecture, work in a way that is very different than when all of us went to school.

One of those schools is in Toronto. It’s the York Regional School District, and we’re taking the very latest and seeing how that works. Very often what we learn is that the challenge isn’t so much the students, but rather, how do we get the teachers ready? How do we get them to embrace this? Because it’s often intimidating to be using a technology in the classroom that you know that the students understand better than you do. Unless you’ve been given the summer to get ready and the right way to reach out and understand it, perhaps you’ll show some resistance to that activity.

We look at trends. One of the interesting trends is that less students are going into math and science. That’s true everywhere in the world except in Asia. Here in North America, the drop is quite precipitous, and yet it’s fascinating because actual, the job creation in those areas, the job opportunities are quite strong. Clearly, the way the curriculum we’re using, the way we’re making it sound like an interesting field to go into, it is discouraging a lot of people who would have great opportunities there.

It’s particularly true for women and minorities. The numbers are declining overall, and the percentage of women and minorities are steady in some cases, actually declining as a percentage of the declining percentage, so there is a lot that needs to be done there.

One belief is that we need to change curriculum. We need to make the learning of math and science more in context so that you understand why these very abstract tools are of interest. Already, some work my foundation does in the United States, we’ve seen that when we have these themed high schools, and no matter what the theme is, whether it is arts, construction, or science, that the engagement in math and science in those schools is much higher. In fact, in several of them, over twice the number of students graduating are going into math and science as coming out of typical high schools. I think that suggests that we really need to look at how that teaching is done.

I’m saying this digital world is going to bring some exciting opportunities. It, of course, brings with it some challenges, including what some people have called the digital divide. How do you make sure everybody has access to this technology? There, one of the joint projects my foundation and Microsoft did was working with libraries about four years ago in making sure that they could get computers connected up to the Internet. That’s been very successful, so that it’s not just the kid who has got the Internet connection at home but also any kid who can get to the library that can participate in these activities.

I think as we look at these activities, it raises this issue of social responsibility for businesses. Where can they bring their expertise to bear? Should they have an association with one of these high schools, and actually, this theming approach makes that even more possible. There is a lot of good examples where that has worked out.

For a software company, obviously we want our employees to see how we can contribute. We want them to get involved in schools and how new software can work there, and there are so many ways that technology can play a role. A system that was very innovative that was developed in Toronto and then adopted nationally in Canada is a system that tracks missing children. It is called the Child Exploitation Tracking System, CETS, and that has been adopted by many countries around the world now because it was made available for free to them. Canada and Microsoft went out to these governments, and there is a huge benefit to having that system be common so that as you’re dealing with global problems, you have a common database, and so you can track the information and see if somebody has found someone, no matter what country that is.

Some of these challenges, obviously, government plays the central role. Raising the level of investment in education is a government policy, and that needs to be done in a number of ways. I understand that is a real theme, a lot of people talking about that. Some of the trends are good on this, but the investment has to be at the high-school level: the exposure to technology; getting the teachers to work in these new ways; to have school experimentation and allow these things to be tried out. And then funding things at the university level so that the research activities can lead to the spin-offs in jobs and the spin-offs that come through innovation.

If we look at the two most dynamic industries, biotech and software, we see that the start-up creation is not associated with the large population centers, but rather is very strongly correlated with the location of the larger research universities. In the United States, it is the Silicon Valley area around San Jose and San Francisco. It is the Boston area. Seattle area gets a little bit of the benefit from Microsoft being there, but in turn, we’ve given back to the university there. We match, no matter what university our employees come from, we have a matching program that has actually worked out very well for them to give back in a very significant way.

A lot of these educational issues are very challenging issues, and yet, I don’t think there is any getting around them. It is the countries that draw on the business community, get the business community to think long-term about these issues, think about where in the education system you can drive the interest and innovation. Those are going to be the economies that seize all of this improvement, where the world as a whole will be getting richer faster than ever, but the disproportionate share of that, particularly for the richer countries will only come where they’ve made these breakthroughs in education.

We’re very excited to have this dialog, talking about how that applies here in Canada and see how we can do our part. Thank you.

NANCY HUGHES ANTHONY: Thank you very much, Mr. Gates. Have a seat right there. Thank you very much, Mr. Gates, for those insightful remarks, and I’d like now to welcome Mr. Allan Gregg to the stage for a short discussion with Mr. Gates. Allan is going to help facilitate the question period that will follow. Allan Gregg no stranger to here and one of the co-founders of the Strategic Council and a founder in 1979 of Decima Research. Allan Gregg is one of Canada’s senior research professionals and corporate advisors and appears on a weekly CBC national news panel and is the host of two popular and respected talk shows. Ladies and gentlemen, please welcome Allan Gregg.

ALLAN GREGG: Good to see you again. Nice to talk to you. Thank you very much on behalf of the audience for taking the time, including to have this conversation. We’re going to open it up to the audience. It is a rare opportunity to ask Bill Gates what might be on your mind, but first, we had a very interesting session this morning at CAN>WIN. Among other things, Elyse Allen from GE Canada talked about the fabulous tools they have within their organization to work on skills developed, to insure that productivity improvement takes place. Where that often falls down in Canada, probably around the world, is in small business. Eighty percent of our employment don’t have the same kind of tools. Take me back to the garage with you and Paul Allen. What did you do? What was the conversation about? How are we going to get the best and brightest to come to work for us in this new idea?

BILL GATES: Well, at the very beginning, it was easy: we just hired our friends. The only scary part about that was it is really tough if you can’t pay your friends. You feel badly about that, and we had a lot of customers—because the industry was new—we had a lot of customers that were going out of business and would. It would be tough. They didn’t end up paying in many cases.That took us up to about size 20, hiring our friends. Then we really had to step back and think about how do we systematize this? What is it about bright software engineers that is going to make us attractive to them? We had the most ambitious goals of any software company ever, but how do we identify them?

We got very good at meeting the top professors on various campuses and saying to them that we wanted to have a long-term relationship with them, but we wanted to understand who their best students were and make sure that they saw the opportunity to come for Microsoft. We were very big on asking scientific questions as part of the interview, and that worked very well for us. We drove to a profile of somebody who was very engaged in software engineering.

ALLAN GREGG: You’re up to 61,000 employees. How does that challenge change? Again, just in terms of attracting the best and brightest.

BILL GATES: For us, it has always been less about what somebody knows in particular than what their talent is. Finding that out, you want to ask them about something they’ve really thought about, really been engaged in, and see if they have a complete model and if they’ve thought about different approaches and how broadly they went out and found related-type things.

Today, it is hundreds of universities around the world we need to have great relationships with, both in terms of the top students there but also in terms of the research that goes on. If you think of our industry, some of the historical research leaders like Bell Labs, Xerox, actually do very little research today. That’s dropped off. Microsoft has increased, but the piece that is the backbone is actually in the university, so we need to have those relationships.

So, we’re helping to fund the research and seeing when something might get close to commercialization. For example, robotics today. Nobody knows exactly what form that market will take, but we’re making a big investment working with universities, getting tools out to them, because we know, somewhere in the five-to-ten-year timeframe, that will emerge as a huge software-driven activity.

We’ve had to scale it up. There is not way that 61,000 can be as good as 20 were, on average. We’ve done better than our fair share at getting great people.

ALLAN GREGG: I want to talk a little bit more about Microsoft’s historic and current relationship with universities. In Canada, it’s generally acknowledged that our business community has a very undeveloped relationship with the academic community, and we’ve got, quite frankly, a woeful record when it comes to the commercialization of R&D that is taking place in the universities. Now, we know that universities also have lots of research money in this country. Above and beyond what you’ve already told us, talk to me about the importance of universities to Microsoft’s development and the specific things you did to ensure that those relationships endured over the course of the history of the company.

BILL GATES: I’d say that the breakthroughs that come into the software industry, and it’s hard to be numerical in this, but about half of them really come out of the university environment. They are generally a hybrid, where the seed of the idea was in the university environment, and only when either a start-up or an established company can take it and refine it does it get out and have an impact on the marketplace, so this boundary between the university and the technology companies needs to be quite small and even fairly porous.

We recently did an innovation center up at Waterloo, which was to really systematize some of the things we’ve been doing informally by saying, “Hey, we want, if you have an idea of starting a software business, we want to help you from the beginning, give you special treatment, make sure you understand the new tools and technologies,” because we need lots of successful startups in our industry. Some of them won’t be successful, but a lot of them will be where the breakthrough ideas are coming forward.

I think it’s definitely a best practice that the biology-related companies and software companies have done a better job working with the universities. In the U.S., actually, professors get to own part of the intellectual property they create, so they have this huge incentive to see the thing out there and be adopted. In Europe, they really—the distance—put the U.K. aside, because it’s unique—the distance between the universities and the businesses has been a big problem for them and a reason why they just don’t see nearly the same level of start-up activity.

ALLAN GREGG: Keeping the best and brightest, in your industry especially, your absolute best employee could become your most ferocious competitor. I remember, the last time we talked, you said you personally had never received a stock option in your life. What makes those people stay? What do you do to keep them?

BILL GATES: Well, my case is kind of unusual. If you’re a founder of a company, you should probably not try and compensate yourself at a market level. You should be an exemplar of saying, “Hey, I already own enough. I don’t need to get some big salary or options,” and so both Steve Ballmer and myself decided we weren’t going to participate in the option program.

We had an option program, actually, discontinued about three years ago, now, because with the volatility in the market, it became very—almost capricious in how it would generate rewards. We turned to a stock share system that is much better. It doesn’t have the same sort of half the time being worth nothing and half the time being worth double, and so that has been a great thing, and I think you’re seeing the entire tech industry move away from these very volatile forms of compensation, which had strange accounting treatment that sort of made it look like free money. You’re seeing that some people actually treat it like free money, in a fairly inappropriate way, and so the excesses were really quite extreme.

Having said that, in this industry, it’s very competitive for hiring. If you’re a sharp person at a university, you’re going to get a job offer from a lot of people, people like ourselves or Google or startups, and so these jobs pay extremely well, and the opportunity to advance within, say, a four- or five-year period is quite dramatic. You can be in charge of a major product area very, very quickly.

ALLAN GREGG: I want to ask about that, too, but we’re going to throw it open for questions in about two minutes, so anyone who has got one, make yourself known. Put your hand up. Someone will bring you a microphone.

Last time we talked, you also said that your philosophy, perhaps not stated, was that every two years you bet the company. How important is innovation or just an innovative culture to attracting, again, those smart people? What comes first? Does talent breed innovation, or does innovation attract talent?

BILL GATES: For some types of innovation, they are very long-term in nature, like putting TV on the Internet. We started 10 years ago. Speech recognition we started more than 10 years ago, and it’s still not in the mainstream. The idea of this Tablet computer where you go—instead of taking notes on paper, you just go and write with ink, that’s moving its way. It’s just at the very beginning of getting into the mainstream, and so you need a culture and an overall framework where you’re willing to invest on these risky things knowing that when they pay off, they can often pay off in a very dramatic way.

When speech recognition becomes mainstream, everybody will say, “Of course that was going to happen. I just want to talk to my phone. I can tell my TV what I want to see. While I’m in the car, I can ask for directions.” It’s kind of a common-sense thing, but it’s not there yet. It’s probably, oh, another $500,000,000 for us before it gets there, but that shows we’re serious about it.

So I think for long-term innovation, it’s a corporate culture thing. It’s not—sometimes the model of innovation is too much the one-man idea type thing. The really big changes—how do you make secure software? How do you make it easy for a teacher to develop courseware? These types of things aren’t just one single idea. They are many ideas that come together and get refined in the marketplace, so your corporate culture has to be that you’re willing to take these bets, and that does tend to attract in a certain type of person.

One thing that was risky for us was, when we did our peer research group, we had seen companies like Xerox and AT&T do very good research but not have it be productized, at least within their companies. It was productized by us, but we wanted to productize our own research, and so making sure that boundary between the product groups and the research groups was a very soft boundary and then between our research group and the universities was a very soft boundary.

That’s something that we’ve had to be very innovative—the way that, online, we publish what we call “quests,” the idea that this tablet PC is a quest, and let anybody in the company who sees that, who thinks it’s stupid or they think they can contribute to it, come online, and we have the equivalent of a blog-type environment where people put up their ideas, but it’s nicely protected in the right way, so you draw out the level of commitment.

We have a thing called TechFest where our researchers literally do a product fair that you go and see the research, and 15,000 people come and go through—it’s about 500 booths of the researchers’ work. A researcher enjoys saying, “Gosh, you’ve got to put this in your product.” It gets people thinking about the breakthroughs that are coming. There’s a lot to be done to get that payback from research, so people shouldn’t think these examples, like Xerox and AT&T, represent the current state of the art. There are now ways that you can basically show a straight benefit from increasing research investment.

ALLAN GREGG: Question from the audience for Bill Gates. Have one right back at the corner. Identify yourself, please.

QUESTION: Hi. My name is Trevor Sprague. I’m the Chairman of the Winnipeg Chamber of Commerce, and one of the things that we have as part of our strategic plan at the Winnipeg Chamber is to engage our young people in building a culture of entrepreneurship. One of the interesting things is that with a generation so used to technology and innovation and change, entrepreneurship should be a natural fit. We’ve decided, in our area, to partner with an organization called Junior Achievement to work with children in high schools, giving them classroom learning and practical experience in the areas of entrepreneurship. I was curious: in your travels, are there other things, are there other best practices that you’ve seen that are working at linking business and young people, bringing them together to understand how entrepreneurship fits into our concept of society?

BILL GATES: I think Junior Achievement is a great program, and I think the quality of any Junior Achievement program just depends on how much the local businesses are willing to have top people who are broad thinkers go in and actually get involved in those Junior Achievement classes, where they try and think up a product and think about a business model and get young people with a business mindset from early on. That’s a fantastic thing.

Giving people the ability to use the Internet, that’s one of the more basic things here because once you have access to the Internet, you’ve basically equal with the most privileged student in the world. It’s the same information archive. When I was a student, I had an advantage: I had an encyclopedia at home. Other people didn’t. It was kind of boring reading it A to Z. I did it, but it’s a lot easier now because knowledge is organized electronically, so you can do it by timeframe and subject area, and I think you’d probably remember a lot more than the A to Z approach leads to.

So just that basic access thing—we have got to renew our interest in having that. When you have lab computers that you have to stand in line and wait for, there’s a tendency for the more aggressive males to sort of dominate that and have people think, “Oh, that’s for them, not for me.” You get this technology separation. That’s really awful because a lot of the good ideas in any domain of business are going to come from the other part of the class.

ALLAN GREGG: Everyone knows what you’re doing with your foundation now, but in fact, Microsoft has got a long history of making sure that it’s involved in the community. Can philanthropy and corporate philanthropy be part of the human resource puzzle? Can you attract better people if you are seen to be a good company?

BILL GATES: Absolutely. In a job interview, you’re not going to sit with some very talented person and say, “We’re going to make more profits. We’re going to grow, and our profits are going to be bigger, and you should come here because—just look at that profit going up.” That should be part of the subtext, but it can’t be just part of the—they’re not going to feel like, “That is how I want to be involved in changing the world.”

If they can see, for example, you did software so whenever there’s a refugee crisis, people—these wireless networks get deployed because they were just sitting there ready to go. People are trained on them. Families are finding each other, and medical issues are being handled because software just took all the information about who’s where and what’s going on and immediately pulled that together in a chaotic situation. They think, “Boy, I would like to help with that. I’d like to volunteer and go out and be part of one of those deployments or come up with other ideas about how software can help out.”

We always need to expose people to where software is enabling things. We do things, and I’m sure a lot of companies do, where if people volunteer hours, we pay them to do that. We double—we match what they’re—some of their charitable giving type things. There’s a lot of ways you can take these social responsibility issues and get out in front of them and have an atmosphere within the company that you know that you’re an agent of positive change. That is very important in getting the top people to come.

ALLAN GREGG: I think it touches on that last question that was asked, too, because, I mean, there is evidence that that next generation is significantly more interested in good works than traditional job opportunities. Question from the middle of the—well, how about right here, then. Go ahead. Stand up. Oh, sorry. You had one. We will go there next, I promise. Sorry. The joy of failing eyesight.

QUESTION: Jason Martin, from Advantis Systems Integrated, Toronto. Bill, I’m a parent, and I have two small children, and we have computers all over the house. I read recently that you limit the amount of time that, I think it was your daughter, uses the computer. Can you talk about how you’re exposing your kids to technology and just any advice that you can?

BILL GATES: Yes, my oldest is a 10-year-old daughter, and so, actually, she wasn’t that hardcore on using the Internet until just this year. She would mainly go out and see what pets could be bought in the neighborhood, so she was an expert on rabbits and dogs and any, you know, neat animals. That was her biggest use. Then she started at a school which is one of these Tablet schools where they have no math textbook. She just carries the Tablet computer in. While the teacher is talking, they’re always doing things, so it helps get it in your mind. You’re not just sitting listening. You’re actually trying things out, writing things down.

Anyway, it’s a phenomenal thing to see, so she became very avid, discovered a lot of computer games, including one that runs on the Xbox 360 called Viva Piñata where you take care of your garden, and she could spend two or three hours a day on this Viva Piñata because it’s kind of engaging and fun, so we set, I think it’s 45 minutes on weekdays and an hour on weekends, which is total screen time, but that doesn’t count doing your homework. That’s just games, basically, and there’s a bunch. There’s Club Penguin and a bunch of funny ones on the PC and some on the Xbox. That wasn’t very popular at first. My son said, “Am I going to have limits like this my whole life?” I said, “No, when you move away, you can set your own screen limits.”

Of course, just one other thing to mention is Windows Vista has this capability that you could have gotten in the past by buying other software but where you can both control what websites your kids go to, but I think the most important thing is actually the audit log where you can go and look and see where they’ve been spending their time, you know, what websites, who they’ve been instant messaging, and up to some age, to be determined, you know, it’s very appropriate for a parent to get a sense of what they’re seeing out there and be able to have conversations with them about it.

ALLAN GREGG: Question right over here.

QUESTION: My name is Russ Hebert, and I have a question dealing with your philanthropic activities. I know that you have invested a great deal of money into dealing with disease and education around the world. Just this morning, you announced with the government Canada, Prime Minister Harper, money towards AIDS and vaccines, or, I guess, AIDS vaccines.

How do you decide what to invest in, and how do you get the same kind of results that you achieve in business through your philanthropic activities? Just recently, there was an announcement that about $500 billion has been invested in Africa, and a lot of the problems still remain. How do you partner? How do you identify? How do you get accomplishments in that area?

BILL GATES: Well, when I was first thinking about how to give the wealth that I’m lucky enough to have back to society, I thought, “Boy, there won’t be any obvious solution, because any problem where you can have a dramatic effect, somebody will have found that, governments or other people, and so this will all just be marginal dollars on top of the really juicy stuff already being done.”

Then I learned about health in developing countries and how still today in many countries over 20 percent of the children who are born die before the age of five. That’s due to a very few diseases including malaria, diarrhea, and respiratory, and there is basically no medical research done on those diseases. When we announced a $50 million grant early in the foundation for malaria, we doubled the private money going into that. That kills a million people a year.

There’s essentially a market failure that these diseases that account for most of the difference in health outcomes of the poor countries versus the rich country, there isn’t a market for them. We decided that we’d put money into that, and we’d go to the pharma-companies and find out a way that, between our taking some of the risk and their taking a little bit of it, that we could get their best people assigned to these activities, and so many of the pharma-companies jumped in and have been great partners on this.

Global health became our focus and not rich-world diseases, because there, the marketplace works. Pharma is going to work on cancer and Alzheimer’s, and you can be very optimistic about that, because biological understanding is advancing, but an AIDS vaccine, which was the subject of an announcement by the Prime Minister this morning, there’s not a market big enough that it would cause private enterprise to go after that, and so we need a level of cooperation and government and philanthropy taking out the risk to solve that, which is the toughest problem by far.

Of all the top 20 diseases, I’m very optimistic we’ll get vaccines for most of those in the next 10 to 15 years. The toughest, the hardest, will actually be AIDS. Many of the others we’re much further along on. So basically our foundation, anything where we can save a life for less than $1,000, we think, “Hey, let’s take a look at that.” Anything else, we kind of say, “No, this is the place we’re unique,” and we’ve been able to gather together the top malaria people and T.B. people, and in all the 20 diseases, we’re going to make sure we do that as our top priority. It has meant a lot of partnerships with companies and governments, and the developing world has got a certain interesting complexity to it, but I’m very optimistic about it, and that became our thing, because simply nobody had stepped up for that cause.

ALLAN GREGG: Next question, next and last question.

QUESTION: Thank you. I’m Victor Fedeli, the mayor of the city of North Bay here in Ontario. Would you share with us your thoughts on the concept of the $100 computer that we hear so much about for developing countries? Thank you.

BILL GATES: Well, when we think about computers in developing countries, it is interesting to note that the average machine bought in a developing country and in the rich world are not any different. They’re the same machines. They don’t want some—if they’re going to train their teachers and build up a network and all that, they don’t really want some super-limited approach. What is very expensive is the curriculum, the teachers, and the network. The actual hardware, whether it is some clever way of using a $50 cell phone that we’re working on or a $200 PC, $150 PC, that is not the key issue. The key issue is, what is the material they access, and how are they motivated to do that, and how do the teachers, who are a big part of this equation, how are they involved in doing that?

And so we have said that this experimentation should start on a small scale, and that it shouldn’t just be—shouldn’t be a developed world versus a rich world thing, that these experiments ought to be done in both of those countries. The more hardware variety that’s out there, the better, but it’s over-focusing. Even if that was a $0 computer, that wouldn’t magically change the situation. Even here in Canada, your monthly fee for broadband adds up to more than the cost of a cheap computer within a single year, and in rural, developing countries, those broadband costs are 10 times what it is in a place like Canada, so you can just see that if you just focus on this one piece, you’re not thinking about that overall problem.

It’s also important to remember that when we think about developing countries, and you can put them in different tiers, having a computer for the most needy countries is not a priority, and they should not take their government budget and go to some nice press conference that feels fun and say, “Hey, we’re going to get computers.” They ought to get electricity into the schools. They’ve got to get the schoolteacher to come. They ought to work on literacy, which, it turns out, you don’t need computers to do that, and so it’s easy for us in the rich world to say, “Oh, yes, this must be the missing thing. Forget health, electricity, and all these things.” And so a lot of this is more mid-tier and up and not necessarily the first priority of a number of countries.

QUESTION: Last thing. You talked in your remarks about how the computer and software can facilitate learning. I’m interested in your view of the whole Wiki phenomenon and peer content development. I mean, can the Web 2.0 be used to enhance skill development, peer learning? Is that a viable vehicle? Is that something we should be looking at more seriously than we are right now?

BILL GATES: Well, absolutely. Most corporate training has shifted from this notion that you have to go to a class that’s off-site to having online video and then skills assessment, and then you assume that people have seen all those online videos, and then they can go to some study groups and work on problems together, and so to the degree that they’re going to leave their office and have an inflexible period of time, it should be that study-group activity. Now, even that there’s ways of doing online, but for some topics, we find that face-to-face is still better there. A lot of our skills development, you just watch the lecture online and then take the test for that information.

This whole thing, the digital world, it’s hard to appreciate—actually, digitally recording all the meetings and putting them online and letting people navigate through them is so cheap nowadays that that’s just kind of common sense, but we all grew up in an era where that would have been very expensive to do and very hard to find. We didn’t have the thing that could build the transcript or that could take the video and automatically make it look good, and so all of these training issues are really changing. Great lectures are out there on the Internet. I’m watching MIT lectures and other great things just because I can call those up, so I’m very up-to-date on those things.

For the motivated learner, the Internet has already changed things, but motivating learners by picking the themes, saying, “Okay, this is why calculus is interesting to learn,” that is where the teacher and these new school reform-type approaches really come in, because you can see this dispersion today. The motivated learner, it is all out there. I mean, literally, you wouldn’t even need to touch a textbook. You just get a Internet-connected PC, and there it is.

We connect up, with a lot of our learning activities, a Wiki. Now, the Wiki we offer is under a thing called SharePoint where a corporation can actually control who is using it and how the information is backed up and maintained and various things. It’s sort of the best of the consumer web, which is the Wiki thing, together with these corporate requirements about privacy and backup and those things.

So, yes, there is a flourishing of activity, and we should be able to put in teachers’ hands the ability to take a great physics lecture and add little examples in or little exercises, and as the kids are getting more and more use in on the computer, that idea of a teacher seeing how the other teachers are entering the courseware, they take it; there is a simple tool for them to pick what they think works for their class or for their kids that are ahead, pointing them off to some other thing they should go and look at. We’re going to empower teachers in that way. We’re just at the start of that revolution.

ALLAN GREGG: Mr. Bill Gates, on behalf of the entire audience, I want to thank you so much for joining me. It’s been a real pleasure.

SEAN FINN (Chair of the Board of Directors of the Canadian Chamber of Commerce): Ladies and gentlemen, this is unfortunately all the time we have, although I know we would like to continue this fascinating discussion with Mr. Gates and Mr. Gregg. Mes sincères remerciements à Monsieur Gates et à vous tous pour la participation du midi. Thanks to Allan Gregg for his help in moderating the question period, which was not easy. Great job, as usual, Allan. Thank you very much.

Mr. Gates, on behalf of the Canadian Chamber of Commerce and all our guests here today, I express our sincere appreciation for accepting our invitation to address us here in Ottawa today. We especially thank you for your candor and invaluable insights in responding to questions from the audience. Without doubt, your leadership and trailblazing innovations have not only changed the way we conduct business in Canada and elsewhere around the world, but they continue to touch our lives and shape the way the world communicates.

We also commend you and your wife for the outstanding work you have done, you are doing, through the Bill and Melinda Gates Foundation. We wish you well and continued success in this extremely important endeavor. We also thank you on behalf of all Canadians for your great investment this morning. As well, Mr. Bernier, on the behalf of the Government of Canada, for their involvement. That investment will do great things for our country, no doubt, and for the AIDS issues in Canada and elsewhere.

I’m pleased to inform you today that the Canadian Chamber of Commerce will be making a donation to your foundation as a token of our appreciation for your sharing some time with us today. Once again, our sincere thanks and best wishes for continued success.

Our luncheon is now adjourned, and I remind the delegates to the CAN>WIN Summit that your meeting will resume next door at 2 p.m. Merci beaucoup. Bon après-midi.